Choice Hotels International, Inc. v. MAA Laxmi, LLC et al
Filing
10
MEMORANDUM OPINION. Signed by Judge Paula Xinis on 3/29/2017. (kns, Deputy Clerk)(c/m 3/29/17)
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-,FlED
--""OOCBl
.ENltRED
.IlCEIVED
MAR 2 9 Z017
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
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CHOICE HOTELS INTERNATIONAL.
INC.
*
Plaintiff.
*
Civil Action No. PX 16-2322
v.
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MAA Laxmi. LLC.
el
al.
*
*
Defendants
******
MEMORANDUM
OPINION
Pending before the Court is Plaintiff Choice Hotels International,
"Plaintiff')
Application
Judgment.
ECF NO.8.
judgment
Inc:s ("Choice" or
to Confirm Arbitration Award, ECF No. I, and Motion for Default
For the following reasons. Choice's
request for this Court to enter default
in the amount of$12 1.789.79 is GRANTED.
I.
Background
On October 18.2016. Choice filed its Motion to Confirm Arbitration Award, ECF No. I.
after having obtained a judgment
against Defendants MAA Laxmi. LLC ('"MAA Laxmi"),
Jaycsh Bhakta. Kasmira Bhakta, and Sachin Bhakta. collectively. "Defendants."
proceedings.
in arbitration
Choice and Defendants had entered into a franchise agreement on December 22,
2006 that provided for arbitration as its dispute resolution mechanism for breach of the
agreement.
ECF No. 1-3. Choice initiated arbitration proceedings
attended. On March 2, 2016, an "Ex Parte Award of Arbitrator"
$121. 789.79 representing
"outstanding
which none of the Defendants
issued in the amount of
invoices dated from January 12. 2012 through December
13. 2012:' "'lost profits".'
interest charges on unpaid invoices. as well as administrative
fees and
expenses. ECF No. 1-2 at 2.
Jayesh Bhakta and MAA Laxmi were properly served on July 13.2016. ECF NO.4.
Kasmira Bhakta was properly served on August 4.2016.
properly served on September
15,2016,
ECF NO.5. and Sachin Bhakta was
ECF NO.6. Defendants failed to respond to Choice's
Motion or otherwise contest Choice's claims. Choice then moved for entry of Default, ECF No.
7. and Default Judgment.
ECF NO.8.
Defendants did not respond to these motions, and the
Clerk entered default on February 3. 2017. ECF NO.9.
II.
Standard
of Review
Pursuant to Federal Rule of Civil Procedure 55(a), "[wJhen a a party against whom a
judgment
for affirmative relief is sought has failed to plead or otherwise defend, and that failure
is shown by affidavit or otherwise. the clerk must enter the parties default." Fed. R. Civ. 1'. 55(a).
Thereafter.
the court may enter default judgment at the plaintiffs
request and notice to the
defaulting party. Fed. R. Civ. P. 55(b)(2). Plaintiff, however, is not automatically
default judgment
judgment
entitled to
simply because the defendant has not responded. Rather, entry of de fault
is left to the sound discretion of the court. See. e.g., Choice Hotels International. Inc.
.fa I Shree Nal'{lurga. LLC. DKC 11-2893.2012
I'.
WL 5995248. at *1 (D. Md. Nov. 29, 2012); see
also Choice Hotels International. Inc. v. Austin Area Ho.\]Jitality.Inc.. TDC 15-0516,2015
WL
6123523. at *1 (D. Md. Oct. 14.2015). Although the Fourth Circuit has announced a "'strong
policy" in favor of deciding cases on their merits, United States v. Scha.tfer Equip. Co., II F.3d
450.453
1
(4th Cir. 1993). a default judgment
may be appropriate when a party is unresponsive.
The arbitralor awarded "S57.816.00 for room charges at the rate of $40 per room per month for 21.9 months for 66
rooms as lost profits:' ECF No. 1-2 at 2.
2
s.E.c. V. Lawbaugh, 359 F. Supp. 2d 418, 421 (D. Md. 2005) (citing./ackl"On v. Beech, 636 F.2d
831, 836 (D.C. Cir. 1980ยป.
III.
Analysis
A plaintifTmoving for default judgment "must show that it is entitled to confirmation of
the arbitration award as a matter of law." Choice, 2012 WL 5995248, at *2 (collecting cases).
The Federal Arbitration Act. 9
U.s.c.
* 9, provides that "at any time within one year after the
award is made any party to the arbitration may apply to the court so specified for an order
confirming the award, and thereupon the court so specified for an order confirming the award."
Here, Plaintiff filed its motion for confirmation within one year. Section 9 further provides that
this Court must grant the order unless the award is modified. vacated or corrected pursuant to
sections I0 and II of the same Act. [d.
Review of an arbitration award is "severely circumscribed" because to allow for a more
expansive review would "frustrate the purpose of having arbitration at all-the
quick resolution
of disputes and the avoidance of the expense and delay associated with litigation." Apex
I'lulllbingSupply.
[nco V.
u.s. Supply
Co.. [nc., 142 FJd 188, 194 (4th Cir. 1998). Accordingly.
this Court may vacate an arbitration award based on one of the grounds enumerated in the
Federal Arbitration Act or if the arbitrator acted in manifest disregard of law.
[do
Neither are at
issue here.
Rather, the instant arbitration clause in the franchise agreement specifically provides for
final and binding arbitration for any "controversy or claim arising out of or relating to" the
franchise agreement.
Ecr No.
1-3 at I. Although Choice's motions do not expressly identify
where arbitration was held, the Franchise Agreement makes plain that it would take place in
Maryland, and the arbitration award confirms the proceedings were held "in accordance with the
3
arbitration agreement entered into" between Plaintiff and Defendants. ECF No. 6-2; see also
Defendant's
Motion for Default Judgment. ECF NO.8 at 3 ("The arbitration was conducted in
accordance with the terms of the parties' Arbitration Agreement.").
The parties are also diverse.
and the amount of the arbitration award for which the Plaintiff seeks confirmation
jurisdictional
minimum for diversity jurisdiction
exceeds the
in this Court. See 28 U.S.c. ~ 1332(a). The
pleadings before this Court. therefore. demonstrate
that the arbitration award can and should be
confirmed.
The arbitrator awarded Plaintiff$121.789.79.
franchise fees. $24.230.71
administrative
in
in interest. $57,816.00 in liquidated damages, and $9,012.50 in
expenses and arbitrator compensation.
default judgment
this action:'
which was comprised of$30,730.58
ECF No. 1-2. Plaintiff requests entry of a
in that amount. "plus post-judgment
interest until paid and $400 for the costs of
ECF NO.6. The Court grants entry of$121,789.79
Plaintiff requested the same in its initial petition for confirmation
plus $400 in costs because
of the arbitration award. ECF
No. I. See Fed. R. Civ. P. 54(c). Insofar as Plaintiff seeks reimbursement
for post-judgment
interest, such is awarded by operation of law and not by Court order. See 28 U.S.c. ~ 1961(a);
Choice. 2012 WL 5995248. at *4. Plaintiff has demonstrated that it is entitled to the remaining
requested award and a default judgment
IV.
in that amount will be entered.
Conclusion
For the above-stated
reasons, Plaintiff Choice's motion for default judgment
scparate order will follow.
3/29/2017
Date
~
Paula Xinis
United States District Judge
4
is granted. A
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